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Should client register for CIS?

Should client register for CIS?

Hi all,

I have a limited company client who is a registered installer of wood burning stoves. They also carry out any associated building work needed to install and fit the wood burning stoves, which could include widening fireplaces or fitting new hearths.

The company will occassionally subcontract tradesmen, such as plasterers, to help.

I am interested in the community's opinion on whether or not the client needs to register. I have looked at the below legislation and consulted the client. The client has spoken to two competitors who are both not registered and say they don't need to.

http://www.legislation.gov.uk/ukpga/2004/12/section/74

http://www.hmrc.gov.uk/manuals/cismanual/CISR14090.htm

Always had great help and advice from this site so thank you in advance.

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avatar
29th Feb 2016 10:37

If a bathroom fitter

Who pays subbies needs to register for CIS (as mainstream contractor), then I see no difference with your client.

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By cfield
29th Feb 2016 10:54

Yes they do

The CIS scheme covers all construction work carried out in the UK including (but not limited to) site preparation, alterations, dismantling, construction, repairs, decorating and demolition. This includes the work your client does.

If they engage plasterers, they must first decide whether he would be employed by them or self-employed. CIS is not supposed to be a handy alternative to PAYE. To be self-employed, he must be in business on his own account. Or she, I hasten to add (don't want to fall foul of the new Equality Commission guidance!).

If self-employed, he/she must register as a subbie on the CIS help line, and your client must then verify him/her (which they will have to do online after 5th April by the way).

If your client does work for other building firms (as opposed to with householders or businesses directly) they must also register as a subbie, even though they are a limited company.

 

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29th Feb 2016 10:56

Yes - I think the competitors are incorrect.

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29th Feb 2016 11:27

For who?

Are they installing for the general public, which I would expect to be the norm, or a contractor? They are apparently adapting existing properties not new builds.

For CIS to apply, first you need a contractor or deemed contractor, using a sub-contractor, working in construction.

Having recently had a wood burning stove fitted by a similar company I certainly didn't operate CIS, alterations to the fireplaces are not the norm as mostly you pick a fire to fit the existing aperture etc so I doubt there is enough work of this nature to turn them into deemed contractors.

 I would want more information but in general don't think they are contractors or that the level of construction work would urn them into deemed contractors so CIS would not apply

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29th Feb 2016 11:33

Misunderstanding

Marion Hayes wrote:
Having recently had a wood burning stove fitted by a similar company I certainly didn't operate CIS, alterations to the fireplaces are not the norm as mostly you pick a fire to fit the existing aperture etc so I doubt there is enough work of this nature to turn them into deemed contractors.
You as the householder did not operate CIS. As you say, there is probably not enough work involved to have made you a deemed contractor.

But we are not talking about the end customer (you in this example) but the company fitting the stove. Assuming they used subcontract labour to do work on your property, they would have been an actual contractor. I assume you don't know whether they operated CIS or not, but I agree with previous respondents that they should have.

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avatar
29th Feb 2016 11:40

Construction

It always strikes me as unfair/illogical that a business in this position is supposed to know that they should register under the Construction Industry Scheme when all the guidance from HMRC specifically points towards the Construction Industry which they could reasonably believe did not apply to them.

I would agree that the business in this case is supposed to register however you may find the competitors do not engage the tradesmen directly - a common enough strategy for CIS & VAT.   

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29th Feb 2016 11:42

In practice, HMRC don't seem to make much of a fuss about small scale CIS in grey area situations.

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By jimeth
02nd Mar 2016 11:00

Definitely
They definitely need to register. There is no de minimis for construction businesses - even if they rarely subcontract any work. Only alternative is to get the client to pay the subcontractors directly.

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